Property Investment Structures Explained – Individuals vs Companies

Why Use a Company to Buy Investment Property?

Buying property through a limited company can offer several financial benefits, especially for higher-rate taxpayers.

When you own property personally, rental profits are taxed at your income tax rate — up to 45%. In contrast, company profits are taxed at 19–25% corporation tax, depending on the size of the company.

That’s a big difference — and it gets better:

• Mortgage interest is fully deductible for companies, but not for individuals.

• You can retain profits within the company to reinvest in more properties.

• You can pay yourself via dividends, which can be more tax-efficient than salary income.

However, using a company means more admin — annual accounts, Companies House filings, and corporation tax returns — so it’s best suited for investors planning multiple properties rather than a one-off buy-to-let.

How to Structure Your Companies for Property Investment

If you plan to build a portfolio, it’s worth setting up a structure that’s scalable from the start. The most common and effective setup for UK property investors is the Group Structure — a holding company with one or more subsidiary companies.

1. Holding Company (Parent Company)

This company owns the shares of your property subsidiaries. It doesn’t usually own property directly — instead, it controls and manages the group.

Advantages:

• You can move profits between companies in the group tax-free (under the group relief rules).

• You can buy and sell subsidiaries without paying Stamp Duty Land Tax (SDLT) on the underlying properties — because the buyer is purchasing the company, not the asset itself.

• You can ring-fence risk, meaning one property’s liabilities don’t affect your entire portfolio.

• You can hold other investments (e.g. stocks, lending activities) in the same structure.

2. Subsidiary Companies (Property SPVs)

Each property — or group of properties — sits within its own Special Purpose Vehicle (SPV).

This keeps the ownership, mortgages, and accounting clean and separate.

Advantages:

• Simplifies accounting and financing.

• Makes it easier to sell individual SPVs (and therefore their properties) without triggering SDLT.

• Allows you to manage different strategies separately — e.g. one company for buy-to-lets, another for flips or short-term lets.

Tax and Financing Considerations

When setting up your structure, you’ll need to weigh the tax benefits against the practicalities.

• Corporation Tax: As mentioned, rates are currently between 19% and 25% depending on profits.

• Dividend Tax: When you withdraw profits personally, you’ll still pay dividend tax (8.75%, 33.75%, or 39.35%).

• Mortgage Rates: Limited company buy-to-let mortgages can have slightly higher interest rates (typically 0.5–1% more) and fewer options, though specialist lenders are expanding rapidly.

• Accounting Costs: Expect to pay a few hundred pounds per company per year for accounts and filings.

Still, for long-term investors, the tax savings and growth flexibility often outweigh the added complexity.

Example: Selling Without SDLT

Imagine you own three rental properties, each held in its own SPV under one holding company.

If a buyer wants to purchase one of your properties, instead of selling the property itself (which would trigger SDLT and legal costs), you can sell the shares in that SPV.

The buyer gets full ownership of the company — and therefore the property — while no SDLT is due, since the land itself hasn’t changed hands. This can make your portfolio far more attractive to future buyers.

When to Set Up a Holding Company

You don’t need to rush into a holding company if you’re buying your first property. But if you plan to own multiple properties, or want to scale your portfolio efficiently, it’s worth setting one up early.

You can either:

• Create a group structure from the start (holding company + SPV), or

• Start with one SPV and add a holding company later — though this can involve share transfers and legal costs.

Key Takeaways

• A limited company can offer major tax advantages over personal ownership.

• A holding company structure allows flexibility, better tax planning, and risk separation.

• Selling company shares (rather than properties) can avoid SDLT, which is a major benefit for both buyers and sellers.

• Always get professional advice before setting up your structure — especially regarding mortgage lending, accounting, and group relief eligibility.

Next Steps

If you’re serious about growing your property portfolio, think long-term from the start. Setting up the right company structure can save you thousands in tax, reduce risk, and make your portfolio far more flexible to sell or expand later.